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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Briefly describe the adjustment of a deferred tax liability (or asset) and the related income statement disclosure for a change in the income tax rate.

To determine

Explain the adjustment of deferred tax items and the disclosures in the income statement at the time of change in the income tax rates.

Explanation

Change in tax rate Change in tax rate is a usual practice in corporate world. When the change in tax rate takes place, the company has to adjust its deferred tax amount in order to achieve its desire ending balance.

When the income tax laws (rates) are changed in the future years which is distinct from the previous years’ laws (rates), the corporation should recognize those changes in the financial statement...

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